The case of ITA 1025/DEL/2020 involves TSH Gems & Jewellery Pvt Ltd, a private limited company based in New Delhi, challenging the decision of the Income Tax Commissioner’s Appeals that treated their genuine sales to certain parties as unexplained cash credits under section 68 of the Income Tax Act, for the assessment year 2010-11. Filed on March 11, 2020, this appeal sought judicial review after the appellate authority’s decision dated December 13, 2019, which upheld part of the assessment order made on December 22, 2017.
The case was presided over by Judicial Member Yogesh Kumar U.S. and Accountant Member Dr. B. R. R. Kumar. The tribunal heard the matter on October 13, 2022, and pronounced its order on November 17, 2022. The tribunal’s final decision was in favor of the appellant, TSH Gems & Jewellery Pvt Ltd, overturning most of the earlier assessments made by the assessing officer and partially by CIT (Appeals).
The main points of contention in the appeal were related to the treatment of sales totaling Rs. 6,35,90,752 as unexplained cash credits. The appellant argued that these were genuine sales supported by adequate documentation and proof of identity, genuineness, and transaction veracity. The tribunal agreed with the appellant, highlighting errors in the assessing officer’s decision, which failed to provide a proper opportunity to be heard, thus breaching the principles of natural justice (‘Audi alteram partem’).
The tribunal’s decision to delete the additions made by the CIT (Appeals) not only provided relief to TSH Gems & Jewellery Pvt Ltd but also set a significant precedent on how genuine sales should be treated under tax assessments and the importance of adhering to principles of natural justice. This case highlights the intricate dynamics between tax authorities and taxpayers, especially concerning the interpretation and application of tax laws regarding unexplained cash credits.
The tribunal concluded that the sales in question were genuine and that the additions made by the CIT (Appeals) resulted in double taxation, which was corrected by the tribunal’s order. The outcome reaffirmed the need for tax authorities to adhere strictly to legal standards of proof and fair hearing procedures.
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